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Home and con­tents in­sur­ance is ab­so­lutely vi­tal if you live in or near a high-risk area and you don’t want to be li­able for the full ex­tent of any dam­age suf­fered by your home.

But choos­ing the right cov­er­age is just as im­por­tant as hav­ing in­sur­ance in the first place as there are lots of vari­ables when it comes to what’s cov­ered and what’s not.

“Home and con­tents in­sur­ance typ­i­cally cov­ers dam­age from nat­u­ral dis­as­ters, in­clud­ing floods, fires, ex­treme storms, earth­quakes, light­ning, ex­treme ocean move­ments and im­pact (such as fall­ing trees),” says Bessie Has­san, from in­sur­ance com­par­i­son web­site “How­ever, cov­er­age is al­ways within lim­its and you usu­ally have to opt in to these op­tions in or­der to make a claim.

“For ex­am­ple, a typ­i­cal ba­sic pol­icy with fire cover may al­low you to claim for re­sult­ing dam­age, how­ever there are con­di­tions. For ex­am­ple, the fire must not have been started by ar­son.”

Ra­mana James from NRMA In­sur­ance says the main things you should con­sider when choos­ing a home in­sur­ance pol­icy are: does the pol­icy ad­e­quately cover you for the risks you face, and; is the sum in­sured the right amount to replace, re­pair or re­build to get you back to where you were be­fore the loss.

“Most in­sur­ers have cal­cu­la­tors to help peo­ple de­cide the right amount of cover for their home and con­tents,” he says.

“Don’t for­get re­build­ing costs can also in­clude costs of de­mo­li­tion and re­moval of the old struc­tures, coun­cil fees and ar­chi­tect fees or meet­ing cur­rent build­ing reg­u­la­tions etc.”

Ra­mana also says most poli­cies are priced ac­cord­ing to the risk a customer faces.

“If a customer lives in a high-risk area for flood or fire, they may pay more for their poli­cies,” he says.

“Con­versely if a customer is in a low-risk area, they will pay less.

“Some cus­tomers do have an op­tion of re­mov­ing flood cover to re­duce their pre­mi­ums, how­ever if they are in a high-risk area, that may leave them ex­posed.”

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